Chinese regulators are to designate more financial institutions as “systemically important” in their latest move to limit financial risk following a decade-long debt build-up.
A policy framework published jointly on Tuesday by several regulatory agencies sets the stage for securities brokerages, insurers and other financial groups to receive a designation often interpreted to mean “too big to fail”. Global regulators have already applied this designation to the four largest Chinese commercial banks, and China may now also add others to this list.
In an accompanying statement, the People’s Bank of China cited new international regulatory frameworks, adopted following the 2008 global financial crisis, as a model for Chinese regulators working at the national level. It specifically mentioned the Financial Stability Board, the international supervisory body created by the G20 in 2009, and the Basel Committee on Banking Supervision, the body that sets international capital adequacy standards for banks.